By Sudeshna Sarkar, IANS
Kathmandu : After days of acute fuel shortage, the Kathmandu valley was Tuesday hit with its worst crisis in history as the state-owned petroleum importer and distributor reached the lowest level of fuel stocks and stopped supplies to gas stations.
"Kathmandu valley now has just 300 kilolitres of petroleum," said Bishwanath Goyal, managing director of Nepal Oil Corporation (NOC). "This is the minimum mandatory stock we have to keep. We can't sell any of it."
After serpentine queues before the capital's petrol pumps throughout the last seven days, many commercial vehicles were left on the roads by their owners who had failed to obtain petrol or diesel.
Signs saying "No diesel", "No petrol" hung at the entrances of petrol pumps.
Tempers ran high among drivers with a scuffle breaking out Monday before an army-run fuel station in the capital. Police had to resort to baton charging to disperse the mob and five taxi drivers were injured.
Fuming taxi drivers subsequently parked their cars before Singh Durbar, the heart of the Nepal government housing the prime minister's office (PMO), parliament and key ministries, to protest the shortfall.
The unprecedented crisis is the result of the unrest in the Terai plains that resulted in a transport shutdown in southern Nepal, hitting the arrival of fuel supplies from India.
Goyal said there had been no fuel supply to the valley since Friday.
On an average, Kathmandu valley requires 200,000 litres of petrol and an equal amount of diesel per day, 220,000 litres of kerosene and 5,100 MT of LPG for its 350,000 vehicles serving a population of 2.5 million.
The capital and its neighbouring cities of Bhaktapur and Lalitpur are the biggest consumers of fuel, using up nearly 65 percent of the 2,500-kilolitre daily requirement.
Besides the violence and shutdowns in the Terai affecting supplies, NOC is also facing cuts from its sole supplier, Indian Oil Corporation, because of mounting debts that now amount to Rs.2.15 billion (over NRS 3.4 billion).
The debts accrued mostly due to Nepal's loss-making subsidy policy. Nepal's oil prices have been fixed below international market prices, forcing NOC to sell fuel at a lower than cost price.
Currently, NOC loses NRS 8 per litre of petrol, NRS 4 on diesel, NRS 2 on kerosene and NRS 270 per gas cylinder.
Hit by the crisis, Nepal's government has finally woken up to the necessity of revising fuel prices and is expected to give the go-ahead to NOC soon. The cabinet meeting Monday decided to give NOC NRS 500 million from the state treasury to pay IOC.
This will bring the debt down to Rs.1.85 billion.
The government also borrowed NRS 1.2 billion from the Employees' Provident Fund and Citizens' Fund to enable the NOC to build up its fuel stocks again.
Though the Girija Prasad Koirala government has been shying away from raising fuel prices for fear of causing public protests, the indications are that it is finally giving the NOC the nod to raise prices.
Minister of commerce, industries and supplies Rajendra Mahato had last week said that there was a need to adjust prices.
Though the World bank and IMF have been urging Nepal to stop its suicidal policy of fuel subsidy, the tradition has continued due to fear of public unrest.
An earlier price rise resulted in widespread student protests that forced two ministers to quit. Even King Gyanendra had to roll back prices once during his 15-month regime.